Your charity's rules

Updated June 2026

What are rules?

Your charity’s rules are its legal documents that explain:

• why your organisation exists (its charitable purposes)
• what it does
• how it operates and makes decisions

Depending on how your organisation is set up, your rules may be set out in a:

• rules document
• trust deed
• constitution
• charter
• an Act of Parliament (if your organisation was established by an Act)

Why you need to provide your rules

When you apply for registration, we review your rules alongside your activities to check that your organisation meets our registration requirements.

If any of the following are missing or unclear, your application may be delayed, or returned for clarification, or declined.

Your rules must:

• legally bind your organisation
• clearly explain your charitable purposes
• not allow activities that further non‑charitable purposes
• prevent any individual from making a private financial profit or gain
• ensure that any remaining assets are used for charitable purposes if the organisation winds up.

Check your rules are legally binding

Your rules are legally binding if they:

• have been formally adopted by your organisation (for example, signed as a deed or approved at valid meeting)
• clearly name your organisation
• apply directly to your organisation, not to an umbrella or affiliated body
• set out clear requirements for how your organisation operates and makes decisions.

Different legal structures (trusts, incorporated societies, companies) have different technical requirements. You can learn more about legal structures in the Community Law Centre's online resource The Community Toolkit.

If your organisation is incorporated under the Charitable Trusts Act 1957, Incorporated Societies Act 2022, or Companies Act 1993, make sure the Companies Office has the current version of your rules.

What your rules must include

Rules documents include a range of clauses, with some being essential requirements that must be followed and others being optional or recommended to provide flexibility and guidance.

Essential clauses

The following clauses must be included in your rules to meet registration requirements.

Purpose clause

Your rules must clearly state what your organisation exists to do and include a clear charitable aim.

List your purposes clearly and start with your organisation’s main purposes. Keep your purpose clauses separate from any powers clauses.

Avoid vague wording such as “to fulfil social needs”. Unclear purposes make it harder for us to assess your application.

Under the Charities Act 2005, a purpose is charitable if it fits within one or more of the following recognised categories:

• relieving poverty
• advancing education
• advancing religion
• benefiting the community

Some organisations include a principles section (for example, honouring Te Tiriti o Waitangi). This is acceptable, but principles must support charitable purposes and cannot replace them.

We also consider your organisation’s activities when assessing your purposes, because purposes can be identified through your rules or understood from what your organisation does.

Your organisation may still qualify for registration if it has some non-charitable purposes, as long as those purposes support a charitable purpose and cannot be pursued separately from your charitable purposes.

Prevention of private profit clause

Your rules must clearly state that your organisation must not operate for the private financial benefit or profit of any individual.

Reasonable payments for goods, services, or salaries are allowed if they advance your charitable purposes.

Your rules should show that the organisation will:

• use all income and benefits solely to advance its charitable purposes
• prevent people from taking part in decisions about payments to themselves or related parties
• limit payments to reasonable amounts at normal market rates

If a trust wishes to pay trustees or provide them with benefits, this must be clearly stated in the trust deed.

Additional requirement for companies

If your organisation is a company, your rules must also either:

• prevent dividends or payments to shareholders, or
• restrict shares and share transfers to registered charitable organisations or trustees holding shares solely for charitable purposes .

Example: preventing dividends to shareholders

“No shareholder is entitled to receive any dividend or payment from the company by reason of holding shares”.

Example: restricting shares and share transfers

“The directors must refuse to register any transfer of shares unless the proposed transferee is a registered charitable organisation or a trustee who holds those shares solely for charitable purposes as defined in section 5(1) of the Charities Act 2005”.

“No shares may be issued to any person unless that person is a registered charitable organisation or a trustee who holds those shares solely for charitable purposes as defined in section 5(1) of the Charities Act 2005”.

Winding up clause

A winding‑up clause explains what happens to your organisation’s assets if it stops operating and helps ensure assets continue to be used for charitable purposes.

Your rules must clearly state that any remaining assets must be distributed for charitable purposes or transferred to one or more charitable organisations.

If your organisation is a society or company, your rules must include a winding-up clause.

Trusts are not required to include a winding up clause, but it is strongly recommended. Trusts may refer to section 27 of the Charitable Trusts Act 1957.

We do not accept winding-up clauses that allow remaining assets to go to organisations with “similar purposes” unless the clause makes clear that the purposes must be charitable.

Examples:

“If the organisation is wound up and any property remains after all debts and liabilities are settled, that property must be applied or transferred to charitable purposes as defined in section 5(1) of the Charities Act 2005”.

“If the organisation is wound up and any property remains after all debts and liabilities are settled, that property must be given or transferred to another organisation for a charitable purpose or purposes as defined in section 5(1) of the Charities Act 2005”.

“If the organisation is wound up and any property remains after all debts and liabilities are settled, that property must be given or transferred to another organisation for a similar charitable purpose or purposes as defined in section 5(1) of the Charities Act 2005”.

Recommended clauses

The following clauses are not required but are strongly recommended to support good governance.

Power clause

A power clause explains what your organisation can do to help achieve its charitable purposes. This may include things like:

• employing staff
• borrowing or investing money
• owning or leasing property

Any powers included in your rules must not allow non‑charitable activities or private benefit.

Governance clause

A governance clause explains how your organisation is run. It usually covers things like:

• who governs the organisation
• how many officers there are and how they are appointed
• how decisions are made and what counts as a quorum
• what counts as a conflict of interest
• how conflicts of interest are managed

A conflict of interest is any situation where an officer’s personal interests or loyalties could affect their ability to make a decision in the best interests of the charity.

Amendment clause

An amendment clause explains how your organisation can change its rules. It should:

Including an amendment clause can make it easier to change your rules later, including if you need to update them to meet registration requirements.

• include a clear process for making changes
• not require approval from Charities Services (you only need to notify us after changes are made)
• not require approval from Inland Revenue, as this is no longer needed

Examples of clauses we do not accept

We do not accept rules that allow an organisation to:

• set pay where the person being paid can influence the decision
• give loans or advances at below‑market interest rates
• buy, sell, lease, or exchange property at above or below market value
• pay individuals more than normal market rates
• put personal interests ahead of charitable purposes

Rules templates and further guidance

You can use these templates to help you draft or review your rules:

Charitable trust - trust deed

CommunityNet Aotearoa provides a sample charitable trust deed and guide to its clauses. This includes clauses required by law and others that support good practice.

Incorporated society – constitution

The Companies Office provides an online Constitution Builder to help you create or update your society’s rules. The tool generates a draft constitution that includes most required content.

Further guidance is available through Community Law’s Community Toolkit.